Hawaii is once again in the national spotlight — this time not just for its beaches and aloha spirit, but for a new tourism tax that’s tied to climate change and sustainability. The state had planned to roll out a first-of-its-kind levy on cruise ship passengers in 2026, but a federal appeals court has temporarily blocked part of that plan. Here’s what your customers need to know.

What Is Hawaii’s “Green Fee”?

Hawaii lawmakers passed a new tourism tax law — often called the “Green Fee” — designed to help the islands cope with the costly effects of climate change. The law:

• Raises the state’s transient accommodations tax (TAT) on hotel rooms and short-term stays by a small amount, increasing the state portion to 11%.

• Applies this tax for the first time to cruise ship passengers while their vessels are docked in Hawaiʻi ports. This meant cruise visitors would see a prorated accommodations tax applied to their fare.

• Counties can add up to an additional 3% surcharge, meaning visitors could pay as much as 14% in combined state and county taxes on lodging.

• Officials estimated the tax could generate up to ~$100 million annually to fund coastal restoration, wildfire resilience, beach erosion projects, and other climate-adaptation efforts.

This framework was intentionally broad — applying the same type of tax to both land-based lodging and cruise ship accommodations — to promote fairness and make all visitors contribute to protecting Hawaii’s environment and communities.

A Federal Court Blocks the Cruise Portion — For Now

While the Green Fee law was expected to take effect in January 2026, a federal appeals court has now blocked the section that would apply the tax to cruise ship passengers. Opponents — including the Cruise Lines International Association and some local tourism groups — challenged the cruise-tax provision in court, arguing that part of the law violates the U.S. Constitution and federal statutes.

As of now:

• The appeals court has issued an injunction, meaning the cruise-specific tax cannot be enforced until the legal challenge is resolved.

• The rest of the Green Fee (such as the increase on hotel and short-term rental taxes) remains in place and isn’t affected by this ruling.

• Hawaii officials remain confident they will ultimately uphold the law, though the appeal continues through the legal system.

Why This Matters for Travelers & the Tourism Industry

This case highlights a few key trends and concerns:

• Tourism vs. sustainability: Hawaii’s government wants visitors to help pay for environmental protection, disaster mitigation and long-term climate resilience — issues that directly affect the islands.

• Legal and economic pressure: Major tourism sectors — especially cruise lines — argue that the tax could raise costs, impact travel demand, or exceed state authority over maritime commerce.

• Uncertainty for 2026 travel planning: As the law stands, land-based visitors will pay the expanded tax starting in January, but cruise passengers may not be taxed until the lawsuit is fully resolved.

If you’re planning a Hawaiian getaway in 2026:

• Expect higher hotel and short-term rental taxes under the new Green Fee law.

• The cruise-ship tax component has been paused by a federal court decision, so it won’t apply immediately while the legal process continues.

• Even with changes, these taxes support efforts to protect Hawaii’s natural beauty and infrastructure in an era of climate challenges — something that resonates with many environmentally-minded travelers.

Source: AP News